TEEKAY TANKERS Q2-2018 EARNINGS PRESENTATION August 2, 2018
Forward Looking Statements This presentation contains forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) which reflect management’s current views with respect to certain future events and performance, including statements regarding: the completion of the Company’s expected sale-leaseback financing transactions and working capital loan, and the effect of the transactions on the Company’s liquidity and future debt maturity profile; future forward revenues; and crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, the occurrence and expected timing of a tanker market recovery, the estimated slowdown of growth in the mid-size tanker fleet, the amount of tanker scrapping and newbuild tanker deliveries, estimated growth in global oil demand and supply, future tanker rates, future OPEC oil supply, and estimated impact of IMO 2020 regulations on tanker demand. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: failure to complete the sale-leaseback financing transactions and working capital loan and/or potential changes to the final terms of the transactions; the potential for early termination of charter contracts of existing vessels in the Company's fleet; the inability of charterers to make future charter payments; the inability of the Company to renew or replace charter contracts; changes in the production of, or demand for, oil or refined products; changes in trading patterns significantly affecting overall vessel tonnage requirements; greater or less than anticipated levels of tanker newbuilding orders and deliveries and greater or less than anticipated rates of tanker scrapping; changes in global oil prices; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations and the impact of such changes; increased costs; and other factors discussed in Teekay Tankers’ filings from time to time with the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31, 2017. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based. 2
Recent Highlights • Q2-18 Financial Results ○ Generated total cash flow from vessel operations (1) of $16.6 million and recorded adjusted net loss (1) of $28.7 million, or $0.11 per share • Signed term sheets for new financings amounting to $110 million in additional liquidity ○ Total pro-forma liquidity of approximately $190 million as of June 30, 2018 (2) • Secured a one-year Suezmax time charter-out contract with key customer ○ Total fixed revenue of $6.4 million over first 12 months These are non- GAAP financial measures. Please refer to “Definitions and Non -GAAP (1) Financial Measures” and the Appendices of the Q2 -18 earnings release for definitions of these terms and reconciliations of these non-GAAP financial measures as used in the earnings presentation to the most directly comparable financial measures under United 3 States generally accepted accounting principals ( GAAP ). 3 3 (2) Pro-forma for the three financings on slide 4 assuming they were completed as of June 30, 2018 .
Financing Initiatives Amount to $110 million in Additional Liquidity • Signed term sheet for sale-leaseback transaction for 6 mid-sized tankers, which is in addition to the signed term sheet for the sale- lease-back transaction for seven mid-sized tankers previously announced (1) • Signed term sheet for a loan to finance working capital in the Company's RSA pool management operations (1) • Target to complete these transactions is Q3-18 • Additional options available to further improve liquidity position Total pro-forma liquidity of $190M as of June 30, 2018 (2) (1) These three financings remain subject to customary conditions precedent and the execution of definitive documentation. 4 (2) Pro-forma for the transactions above assuming they were completed as of June 30, 2018.
OPEC Cuts Continued to Impact Rates in Q2-18 …but June / July has seen the return of some mid -size tanker rate volatility Q2 Average Earnings Earnings (Last 12 Months) 25 Suezmax Aframax Suezmax Aframax 40 $39 20 $34 30 ‘000 USD / day ‘000 USD / day $31 15 $24 20 10 $17 $16 $16 $15 $13 $12 $12 $12 10 5 0 0 Source: Teekay Tankers Source: Clarksons 5
Tanker Market Fundamentals Improving On track for an inflection point in the tanker market later in 2018 Tanker Demand Tanker Supply • • Global oil demand remains robust 15 mdwt tankers scrapped in 2018 YTD; (+1.6 mb/d in 2018 / +1.5 mb/d in 2019) on track for a record scrapping year • Global oil inventories below 5-yr avg. • Just 19 mid-size tanker orders placed in • OPEC increasing supply in response to 2018 YTD vs. 41 vessels scrapped lower oil inventories / higher oil prices • US crude exports at record high • Mid-size tanker fleet growth forecast approximately 2% p.a. in 2018 / 19 • IMO 2020 positive for tanker market US Crude Oil Exports by Destination Mid-Size Fleet Growth 10% 2.5 China Canada Other Asia Europe Others Suezmax Aframax / LR2 2.0 8% 1.5 6% MB/D 1.0 4% 0.5 2% 0.0 0% 2015 2016 2017 2018(f) 2019(f) Source: Clarksons, Internal Estimates Source: EIA 6
Q3-18 Spot Earnings Update 20,000 $14,200 $14,000 $12,750 $12,100 $10,900 $10,700 10,000 - 1 2 Suezmax Aframax LR2 Q2-18 Actual Q3-18 to-date Suezmax Aframax LR2 Q3-18 spot ship 2,382 1,432 638 days available Q3-18 % booked 39% 37% 31% to-date (1) Combined average spot TCE rate including Suezmax RSA and non-pool voyage charters (2) Combined average spot TCE rate including Aframax RSA, non-pool voyage charters and full service lightering (FSL) voyages 7
APPENDIX 8
Improved Debt Maturity Profile Pro-forma liquidity of $190 million as of June 30, 2018 $500 $450 $48 $400 $28 $350 $ Millions $300 $250 $200 $362 $9 $9 $150 $24 $26 $100 $4 $12 $45 $50 $102 $102 $12 $51 $30 $- 2018 2019 2020 2021 2022 Repayments Balloon Payments Capital Leases Revolver Amortization (1) Pro forma debt maturity profile as at June 30, 2018 for the proposed sale-leaseback transaction for 6 mid-sized tankers, and the previously announced proposed sale-leaseback transaction for 7 mid-sized tankers (discussed on slide 4 of this presentation). 9
Current Stock Price Offers Significant Leverage to a Market Recovery FCF Per Share Spot Rate Sensitivity 1,2 • $5,000 per day increase in spot $2.50 tanker rates equates to $0.32 in annual FCF per share $2.00 • Return to mid-cycle tanker rates $ Per Share $1.50 equates to approximately $1.10 in annual FCF per share $1.00 • Current share price offers significant Mid-cycle rates 3 $0.50 upside during market recovery $0.00 10,000 15,000 20,000 25,000 30,000 35,000 Afra Equivalent TCE 3 (1) Free cash flow (FCF) represents net income, plus depreciation and amortization, unrealized losses from derivatives, non-cash items, FCF from equity accounted investments and any write-offs or other non-recurring items, less unrealized gains from derivatives and other non-cash items. Please refer to the Teekay Tankers Earnings Releases for reconciliation to most directly comparable GAAP financial measure. (2) For 12 months ending Q2-19 (3) Mid-cycle spot rates based on 90% Clarksons global 15-year average. (4) Aframax equivalent TCE: Suezmax = 1.30x, LR2 = 1.00x 10
Fleet Employment – In-Charter 1 350 300 Ship Days 250 200 150 100 50 - Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Aframax/LR2 Days 158 92 90 91 92 92 91 91 92 92 60 Aframax/LR2 Rates 17,858 22,750 22,750 22,750 22,750 22,750 22,750 22,750 22,750 22,750 22,750 Aframax/LR2 Days (1) Based on existing charters excluding extension options 11
Fleet Employment – Out-Charters 1 900 800 700 Ship Days 600 500 400 300 200 100 - Q3-2018 Q4-2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Q1-2021 Suezmax Days 198 107 90 91 27 - - - - - - Aframax/LR2 Days 524 233 90 13 - - - - - - - Suezmax Rates 17,978 17,465 17,500 17,500 17,500 - - - - - - (2) Aframax/LR2 Rates 20,377 22,529 25,000 25,000 - - - - - - - Suezmax Days Aframax/LR2 Days (1) Based on existing charters excluding extension options and expected drydock/ offhire days noted on slide 15 (2) Excludes full service lightering 12
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